Omnibus: Navigating a lose-lose situation

The sustainability reporting landscape is flooded with news, AI-generated summaries dominate LinkedIn, and organisations scramble to keep up with last-minute meetings and town halls. On 26 February 2025, the EU Commission published a draft of the Omnibus I and II regulation – an “earthquake” in sustainability reporting. Does this signal a move towards simplification? In this article, we offer much-needed orientation for practitioners.

The Omnibus regulation has the potential to impact all decision-makers and teams navigating the CSRD, CSDDD, CBAM, and the EU Taxonomy Regulation. But its influence extends beyond these areas, touching on business resilience, risk management, compliance, and broader sustainability goals. These regulations are a means to transform, a boost to transparency, and an invitation to become fit for the future. Originally developed as an answer to market failures, they are now adjusted to the needs of the companies.

In a nutshell, the proposal aims to streamline reporting activities, reduce bureaucracy, and ease internal governance, all while preserving the goal of harmonised sustainability reporting across the EU and promoting competitiveness.

At Implement, we work closely with clients on their sustainability (reporting) journeys. Over the past week, we have received numerous questions and observed growing uncertainty surrounding the latest developments of the Omnibus. In this article, we present our perspective on potential pathways forward.

Setting the scene: Our conversations with practitioners

Through conversations with numerous clients, we have gained valuable insights into the challenges companies face across sectors and sizes. If you are responsible for sustainability in your organisation, you might recognise some of these struggles:

• Investment: Companies have already invested significant financial and personal resources in software, capabilities, and resources, but it is unclear how to allocate those effectively for the sustainability agenda and justify the need for future investments to top management.
• Leadership: Sustainability leaders have convinced C-Level to support the journey by establishing a governance structure across business units. But what will happen with this structure?
• Data crunching: Teams have spent countless hours filling spreadsheets and analysing data, leading to the question: “Why all this detail?”
• Mobilisation: Many people from different functions were onboarded for the ESG agenda, engaging in interviews, workshops, working sessions, and revisions – now wondering why they had to navigate a barrage of abbreviations and complexity (e.g., DMA, IRO, BP, etc.)
  

While the current situation is complicated and might evoke frustration, it can be turned around.

Shifting the focus: Changing the conversation towards impact

More and more teams are starting to perceive sustainability reporting requirements as an opportunity to tackle their sustainability transformation in a comprehensive, structured, and prioritised manner. By fostering thematic acceptance and empowerment across different parts of the company, sustainability becomes a responsibility for the entire company with implications for all areas. This impact might even be achieved unintentionally for companies focused on ensuring minimum compliance.

While simplification and pragmatic approaches – with clear guidance and minimal bureaucracy – are key to advancing the sustainability agenda, we also recognise that the path to compliance involves adopting best practices for sustainability management.

So, how is the reporting burden linked to creating real impact?

1. Management systems: Reporting supports risk management, compliance, and sustainability, strengthening business resilience.
   Example: Searching for opportunities to leverage synergies between the risk identification for the CSRD and ISO 14001 compliance, one of our clients realised that the current approach to risk management could be improved by following a more systematic methodology and involving more perspectives for identification and assessment.
2. ESG knowledge: ESG topics are now being discussed across functions.
   Example: Procurement professionals in a small-and medium-sized company for the first time engaged in a deeper conversation on sustainability needs and opportunities for collaboration on sustainable innovations with a chemical supplier. Also, they identified the benefit of adding sustainability criteria to their supplier scorecard to ensure the green premium they are asked to pay actually results in the sustainable impact promised (e.g., scope emission reduction).
3. Blind spots: Unseen impacts on the environment, people, or the business itself are revealed, prompting prioritised action.
   Example: A multinational client with very high social ambition brought people from multiple locations and countries together to receive feedback on the IRO assessment. In doing so, the social experts discovered multiple initiatives and processes that could be streamlined by better cross-location exchange. CSRD therefore helped uncover inefficiency blind spots and brought stronger collaboration to the agenda.
4. Team effort: ESG responsibilities are being distributed beyond sustainability departments.
   Example: Companies that have entrusted EHS managers with the responsibility for sustainability reporting have thoroughly identified functions and roles with relevant knowledge across ESG sub-topics to contribute to a complete picture beyond the limited insights of EHS managers, particularly in social and governance-related sustainability matters.
5. Dependencies: Previously overlooked dependencies, such as those on nature, are now being recognised.
   Example: The process of identifying impacts, risks, and opportunities in a structured way, keeping multiple stakeholders in both the business area and the value chain in mind, helped a high-technology company formulate its high dependency on ecosystem services, especially water availability. Thousands of litres of water were needed in decent quality for production and cooling processes. While the knowledge about water usage was not new, the dependency was not entirely clear to everyone, leading to the invention of a circular water system to mitigate the increasing risk of water shortages.
6. Perspective: A deeper understanding of business roles within ecosystems emerges, revealing key insights.
   Example: Building on the water example above, the same client engaged in lobbying for the straightening of a river to make more water available during times of scarcity. Identifying the high dependency on nature and the ecosystem services of water provision and purification changed their perspective, prompting consideration of promoting ecosystem restoration to maintain a functioning natural river flow and the habitat of species capable of sustaining good water quality for production processes, while doing good for the environment.

Choosing your pathway: A solution space for informed decision-making

In times of uncertainty, you might wonder why your company cannot simply pause all efforts and wait for a final, legally binding decision. To address this, we explore three scenarios for handling the Omnibus regulation – using sustainability ambition levels as a starting point and outlining tangible actions along with their potential impacts.

1. Being reactive: Sit-and-wait for regulatory clarity and keep colleagues engaged

Actions: Significantly reduce the effort for your company immediately by stopping any sustainability reporting-related actions until there is clarity about when and what to report. Validate the decision with top management, while emphasising the risks and opportunities of taking this approach and the need for internal communication to secure credibility later.

Anticipated impacts: We do not recommend taking this first approach, because it can:

• Send the signal to all involved colleagues that their enthusiasm was in vain, and the sustainability agenda is merely a matter of regulatory compliance
• Heighten the risk of non-compliance, since the Omnibus regulation is currently a non-binding draft
• Cause delays in sustainability management efforts beyond reporting
• Result in inadequate resource allocation for sustainability management, making it challenging to respond even to basic ad hoc developments, such as natural disasters or major system failures. It could lead to insufficient responses to stakeholder demands, which could result in various business risks (e.g., reputational damage, loss of financial access, etc.)

2. Taking charge: Slow down efforts and focus on relevant sustainability opportunities

Actions: Revise your timeline towards compliance with regulations (CSRD, CSDDD, CBAM, EU Taxonomy), particularly in addressing identified gaps. Focus on strategic elements of your current journey, such as your DMA and closing potential/identified gaps with business implications. Stay prepared for various regulatory developments by establishing a robust ESG governance (ESRS 2). Keep the team engaged, informed, and ready to maintain momentum throughout the process.

Anticipated impact: While this approach could work, it could still carry certain risks associated with the sit-and-wait scenario. The positive aspects are that it helps companies:

• Make informed decisions on actions to prioritise
• Involve colleagues and demonstrate that sustainability remains important in a practical manner
• Draw roadmaps with prioritised actions, providing clear guidance on the sustainability (reporting) journey
• Ensure that time-consuming elements of reporting are started on time
• Commit to ongoing engagement and mobilisation at a level suiting a company’s sustainability ambition while respecting time constraints

3. Taking the lead: Accelerate for resilience and sustainable growth

Actions: Continue the journey to enhance business resilience and secure competitiveness by identifying risks and opportunities in a structured manner, while setting clear targets and implementing actions. At the same time, focus on improving operational maturity and organisational structure for sustainability management. Prioritise identifying the added value that planned actions and initiatives will bring to your company and its ecosystem.

Anticipated impact: This proactive approach offers numerous benefits that are not vulnerable to the uncertain repercussions of the Omnibus legislation, regardless of its final outcome. This approach will most likely include:

• Improved risk management that considers ESG risks across the value chain
• Transition plans for identified material topics (CSRD context)
• ESG Data-Hub and process to guide the company and enable the value proposition
• Continuous improvement of the operating model to support sustainability management
• Proactive management in a dynamic environment with regard to regulatory changes, stakeholder demands, and competitive improvements

Why we do not recommend immediate actions based entirely on the proposal

The Omnibus regulation is not yet a legally binding decision. The Omnibus I and II packages, as currently presented in the EC’s draft press release, must still make their way through Parliament and the Council. Even with fast-track policymaking, the process in the EU typically takes four to seven months, meaning we cannot expect full clarity before Q3 2025.

At this time, there are several key numbers and shifts to keep in mind when considering the Omnibus regulation:

• 80% of companies previously within the scope of the CSRD might no longer be the focus due to a change in the scope of application
• Companies in application waves 2 and 3 now might have 712 days (or two years) before reporting begins. Reporting requirements, originally set for 2026 or 2027, will now be pushed to 2028
• The anticipated reduction will be a 70% decrease in the reporting burden of the EU Taxonomy due to the introduction of a financial materiality threshold
• The new proposed application thresholds are for companies with more than 1,000 employees and €50 million in turnover

It is important to recognise that simplification of the regulation does not equate to deregulation. For those preparing for the next project phase while awaiting further clarity from the EU, it is essential to understand that the CSRD remains active legislation. While changes are expected, a complete repeal is unlikely, particularly given the European Green Deal and the push for harmonised sustainability reporting across the EU. The three simplification packages planned for 2025 – sustainability, investments, and smaller mid-cap companies – provide an indication of the direction the legislation will take, with more details found across the 172 pages of the Omnibus documents.

As we move forward, it is important to remain flexible with well-functioning governance in light of potential changes while recognising that the current regulatory framework remains in effect. While simplifications will likely come, the fundamental requirements for structured reporting, similar to financial reporting, will remain. Additionally, the alignment between the Minimum Safeguards of the EU Taxonomy and the due diligence requirements of the CSDDD will likely be refined for greater synergies. One factor that should not be overlooked is the impact on the workforce and other stakeholders. Discontinued or newly initiated transformation projects could have implications for employee motivation, and – as always – companies need to be mindful of these dynamics.